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denying CAFA jurisdiction under Louie where the complaint is not styled as a class action
Summary of this case from Belton v. Hertz Local Edition Transporting, Inc.Opinion
Case No.: 18-cv-0696-BEN-WVG
12-21-2018
REBECCA HOFFMAN, on behalf of herself and all other aggrieved employees, Plaintiffs, v. STERLING JEWELERS, INC.; DOES 1-100, et al. Defendants.
ORDER GRANTING IN PART MOTION TO REMAND, Doc. 7
This is a civil action filed in California state court under the California Labor Code Private Attorneys General Act of 2004 ("PAGA"), Cal. Lab. Code §§ 2698-2699.5. Defendant Sterling Jewelers, Inc. removed the action to this Court under the Class Action Fairness Act ("CAFA"), 28 U.S.C. §§ 1332(d). Plaintiff Rebecca Hoffman now moves to remand, arguing that her lawsuit is not a class action and thus, cannot invoke jurisdiction under CAFA. [Doc. 7.] Plaintiff additionally moves for an award of fees and expenses incurred as a result of the removal, which she contends was improper. For the following reasons, Plaintiff's Motion to Remand is GRANTED IN PART AND DENIED IN PART.
I. BACKGROUND
Plaintiff Rebecca Hoffman filed this action against her employer, Defendant Sterling Jewelers, Inc., in the California Superior Court, County of San Diego. Plaintiff brings her First Amended Complaint for recovery of "Civil Penalties Pursuant to Private Attorney General Act of 2004, Labor Code § 2698, et seq." [Doc. 1-6.] Specifically, she brings four Labor Code violations for: (1) failure to pay overtime wages in violation of Labor Code §§ 510 and 1198; (2) failure to pay vested vacation pay upon resignation or termination in violation of Labor Code § 227.3; (3) failure to pay all wages owed upon resignation or termination in violation of Labor Code §§ 201-203; and (4) failure to provide accurate wage statements in violation of Labor Code § 226(a).
II. DISCUSSION
Defendant removed this action based on original jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d)(2). [Doc. 1.] Plaintiff now moves to remand the action back to state court and for an award of fees and costs associated with removal of the action, which she contends was improper. [Doc. 7.] In support of her motion, Plaintiff argues that PAGA actions like this one are not removable under CAFA, and in the alternative, Defendant's removal is procedurally defective for failing to satisfy the amount-in-controversy requirement. The Court first considers its jurisdiction under CAFA.
A. CAFA Jurisdiction & PAGA
"The burden of establishing federal jurisdiction is on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction." Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). Defendant removed this action under CAFA, which confers original jurisdiction on district courts in any civil action where (1) the action "is a class action," (2) "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," and (3) "any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d)(2). As a threshold matter, the Court first addresses the parties' dispute about whether the action is a "class action" conferring CAFA jurisdiction. The Court finds that it is not.
The Court finds CAFA jurisdiction cannot be invoked because the action is not a class action. Accordingly, the Court need not analyze Plaintiff's alternative argument that Defendant did not satisfy CAFA's five million dollar amount-in-controversy requirement.
CAFA defines a "class action" as "any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action." § 1332(d)(1)(B). Because Plaintiff filed her action in California state court, she did not bring her action under Rule 23. See Baumann v. Chase Inv. Services Corp., 747 F.3d 1117, 1120 (9th Cir. 2014) (reasoning same). Thus, the question is "whether the suit was 'filed under' a state statute or rule of judicial procedure 'similar' to Rule 23 that authorizes a class action." Id.
Because Plaintiff brings her Complaint under PAGA, some background is helpful. The California legislature enacted PAGA because of inadequate financing and staffing to enforce state labor laws. 2003 Cal. Stat. Ch. 906 §§ 1-2. PAGA "authorizes aggrieved employees, acting as private attorneys general, to recover civil penalties from their employers for violations of the Labor Code." Baumann, 747 F.3d at 1119. If the California Labor and Workforce Development Agency ("LWDA") declines to investigate an alleged labor law violation or issue a citation, an aggrieved employee may commence a PAGA action against an employer "personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations." Arias v. Superior Court, 95 Cal. Rptr. 3d 588, 596 (Cal. 2009).
Although a representative action, a PAGA action is not a class action. In Baumann v. Chase Inv. Services Corp., 744 F.3d 1117, 1121 (9th Cir. 2014), the Ninth Circuit thoroughly analyzed the issue, ultimately finding that actions brought under PAGA do not trigger CAFA jurisdiction because the PAGA is not a state statute or rule "similar" to Rule 23. In so holding, the Ninth Circuit relied on the California Supreme Court's explicit finding that "PAGA actions are not class actions under state law" and "[are] fundamentally different from class actions, chiefly because the statutory suits are essentially law enforcement actions." Id. The Ninth Circuit went on to analyze the dissimilarities between PAGA actions and class actions, noting that PAGA has no requirements concerning class notice, the adequacy of the class representatives, or certification (numerosity, commonality, and typicality). Id. at 1123. The Ninth Circuit further reasoned that, "a PAGA suit is fundamentally different than a class action" due, in part, to the very nature of PAGA. Id. Because "PAGA plaintiffs are private attorneys general stepping into the shoes of the LWDA . . . an identical suit brought by the state agency itself would plainly not qualify as a CAFA class action." Id. The Ninth Circuit concluded that "no different result should obtain when a private attorney general is the nominal plaintiff." Id.
In Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., 761 F.3d 1027, 1040 (9th Cir. 2014), the Ninth Circuit offered additional guidance on the class action inquiry for purposes of CAFA jurisdiction. There, the Ninth Circuit emphasized that the "appropriate inquiry [] is whether a complaint seeks class status," and a complaint's "failure to request class status or its equivalent is fatal to CAFA jurisdiction." Id.
Despite the Ninth Circuit's holdings in Baumann and Hawaii, Defendant contends this PAGA lawsuit does invoke CAFA jurisdiction because in essence, it is a class action in disguise. In support, Defendant argues that the penalties Plaintiff seeks in Counts 3 and 4 (under Labor Codes §§ 203 and 226) are not available under PAGA and are only available if she brings a class action. PAGA permits recovery of "civil penalties," which come in two types. See Cal. Lab. Code § 2699(a), (f). First, if the violated Labor Code section specifically provides for a civil penalty, then the PAGA plaintiff can recover that amount. Cal. Lab. Code § 2699(a). Second, if the civil penalty is not specifically provided, the PAGA plaintiff can recover $100 for the first violation and $200 for the subsequent violations. Cal. Lab. Code § 3699(f). For either type, the PAGA plaintiff can recover the civil penalties flowing from an employer's violations in a representative capacity, on behalf of aggrieved employees. Although Plaintiff's Complaint characterizes her damages as "civil penalties," Defendant argues the penalties she seeks under Labor Codes §§ 203 and 226 are actually statutory penalties. See Lopez v. Friant & Associates, LLC, 224 Cal. Rptr. 3d 1, 5 (Cal. Ct. App. 2017) ("Some Labor Code provisions establish penalties that are not expressly denominated 'civil penalties' and are therefore not subject to the PAGA. If a penalty under the Labor Code is not a 'civil penalty,' it is commonly called a 'statutory penalty.'"). As a result, Defendant theorizes, the statutory penalties Plaintiff seeks in her PAGA Complaint are unavailable to her unless she brings a class action, an amendment Defendant seems to anticipate she will make.
Defendant's removal theory puts the cart before the horse. Even assuming Defendant's argument is correct, the fact that a plaintiff's complaint seeks damages only technically available in a class action does not somehow transform the complaint into a class action complaint. Plaintiff may very well amend her Complaint to assert a class action, but a plaintiff's anticipated future actions do not bestow subject matter jurisdiction. See, e.g., Spencer v. United States District Court for the N.D.C.A., 393 F.3d 867, 871 (9th Cir. 2004) (explaining that removal jurisdiction is determined at the time of removal).
If Defendant's argument is correct, Plaintiff has two choices: forfeit the improper damages or amend. Of course, should Plaintiff later amend her Complaint to assert a class action, removal under CAFA would likely be proper. Although Defendant expresses concern that removal would then be untimely, the removal statute offers a potential remedy:
A case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section 1332 more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in had faith in order to prevent a defendant from removing the action.
Setting aside the hypothetical amendments to Plaintiff's future Complaint, the Court considers Plaintiff's Complaint in its current form and finds that it does not assert a "class action" under CAFA. The Ninth Circuit is clear that actions brought under PAGA are not class actions qualifying for CAFA jurisdiction. Baumann, 744 F.3d at 1121. Moreover, a complaint's "failure to request class status or its equivalent is fatal to CAFA jurisdiction." Hawaii, 761 F.3d at 1040. Indeed, in 2002, California adopted certain Rules of Court that govern California class actions. Los Angeles Gay & Lesbian Ctr. v. Superior Court, 125 Cal. Rptr. 3d 169 (Cal. Ct. App. 2011) (discussing C.R.C. Rules 3.760-3.771). These rules require "a complaint in a class action [to] include the designation 'CLASS ACTION' in the caption" and "under a separate heading entitled 'CLASS ACTION ALLEGATIONS," the complaint must describe how class certification requirements are met." C.R.C. Rules 3.761(a), 3.761(b). Plaintiff's Complaint does not satisfy either requirement.
Furthermore, the law is well-settled that a plaintiff "is the master of the complaint for jurisdictional purposes," Hawaii, 761 F.3d at 1040. Here, Plaintiff's Complaint does not assert class allegations under California Code of Civil Procedure § 382 or Federal Rule of Civil Procedure 23. Rather, the first paragraph of her Complaint provides her action "is brought solely under the Labor Code Private Attorneys General Act of 2004." [Doc. 1-6, ¶ 1.] Her Complaint also does not seek class status, plead the existence of a class, define the limits of a class, or even reference the word, "class." Thus, as the master of her Complaint, Plaintiff's "failure to request class status or its equivalent is fatal to CAFA jurisdiction." Id.
Defendant concedes that, "[i]f the entirety of Plaintiff's claims on behalf of herself and all others were authorized, as plead, under PAGA Defendant does not disagree that this Court lacks jurisdiction." [Doc. 9, p. 10.] On a motion to remand, however, the Court is not tasked with evaluating the merits of the plaintiff's claims - whether plaintiff's claims are "authorized, as plead, under PAGA." Instead, the inquiry is one of jurisdiction - whether Plaintiff's Complaint is a class action complaint invoking CAFA jurisdiction. To be sure, the damages sought by Plaintiff may only be available in a class action. But, a motion to remand is not the appropriate means by which to resolve the plausibility of Plaintiff's claims. Instead, such a dispute is best reserved for a motion to dismiss or strike in state court. See also Kidner v. P.F. Chang's China Bistro, Inc., 2015 WL 2453523, at *4-5 (C.D. Cal. May 21, 2015) (granting remand and rejecting defendant's similar argument that the PAGA action was a class action in disguise). Accordingly, because Plaintiff's Complaint does not assert a class action, the Court lacks jurisdiction under CAFA, and the matter is REMANDED to the California Superior Court, County of San Diego.
B. Attorneys' Fees
Plaintiff additionally moves the Court to order Defendant to pay her expenses incurred as a result of the removal, which she contends was clearly improper because of the Ninth Circuit's authority in Baumann and Hawaii. In granting a motion to remand, the Court "may require payment of just costs and any actual expenses, including attorneys' fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). However, "[a]bsent unusual circumstances, attorneys' fees should not be awarded when the removing party has an objectively reasonable basis for removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005).
Here, Defendant had an objectively reasonable basis for removal, notwithstanding the Court's finding that it lacked jurisdiction under CAFA. As explained previously and argued by Defendant, Plaintiff's Complaint appears to seek damages that are available only on behalf of a class, not a representative PAGA action. Thus, Defendant's removal based on those allegations, though incorrect, was not unreasonable. Accordingly, Plaintiff's request for fees is DENIED.
III. CONCLUSION
Plaintiff's Motion to Remand, [Doc. 9], is GRANTED IN PART AND DENIED IN PART. For the previous reasons, the action is REMANDED to the California Superior Court, County of San Diego for all further proceedings. Plaintiff's request for fees is DENIED.
IT IS SO ORDERED. DATED: December 21, 2018
/s/_________
Hon. Roger T. Benitez
United States District Court Judge
28 U.S.C. § 1441(c)(1) (emphasis added); [Doc. 9, p. 21.].